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What's the most important factor affecting the price of a stock?

The company's actual or expected profit is the key factor affecting the price of its stock. If investors anticipate a company will make increasing profits, the stock price will tend to rise because more people will want that stock and will buy it. More buyers than sellers means the price would generally go up because of supply and demand. If the company is losing money, on the other hand, fewer people will want its stock. So demand for the stock, and its price, would tend to fall. There would be more sellers in that case.

When the economy is booming, companies tend to be selling lots of goods and services, and making profits. So stock prices tend to rise. In a recession, with demand for goods and services low, companies are selling less and making smaller profits or losing money. Stocks prices tend to fall, reflecting those lower profits or losses. Other factors affect a stock's price. On a daily basis, news, rumours, world events, inflation reports, employment reports, retail sales reports, interest rates and changes in currency exchange rates affect stock prices. Even if these reports don't directly involve the particular company the stock represents, the reports could temporarily affect the whole stock market. A rise in interest rates can lead to a fall in stock prices. This is because some investors will switch their money from stocks to bonds to take advantage of new, higher interest rate returns offered on bonds. Higher interest rates can also hurt companies' profits -- and therefore the value of their stock -- because that makes it more expensive for them to borrow money. Higher interest rates can also lead consumers to delay buying big-ticket items like houses and cars. This would mean less demand for those and related goods like furniture, reducing companies' sales and further cutting into company profits